The yen continues to move markets. After hitting a 17-month high of 107.63 per dollar Monday , it looked set to weaken Tuesday for the first time in eight sessions, sending Asian markets rallying.
Japan’s broad Topix index was up 1.5 per cent, while the narrower Nikkei gained 1.2 per cent, putting both benchmarks on track for their biggest one-day advances in three weeks.
Japanese equities opened higher, selling off the yen and weakening it by 0.2 per cent at 108.16 per US dollar.
The resurgence in the yen has driven expectations in the market for further easing from the Bank of Japan at its April 28 policy meeting. Another rate cut of 0.2 per cent is expected by June, however, there are a number of opposing factors that may prompt the BOJ to hold back.
FM Aso Confident
Finance leaders from the Group of 20 major economies agreed back in February in Shanghai that excessive volatility and disorderly moves in the exchange rates hurt financial stability, and Finance Minister Taro Aso expected the G20 to discuss the issue again when they meet this week in Washington.
Aso said on Tuesday that Japan could act against the yen's rise as needed, based on a G20 agreement backing currency stability, if "one-sided" and "speculative" moves were observed in the currency market. Aso has the power as finance minister to instruct the Bank of Japan to intervene in the currency market. It cannot do so on its own authority.
The dollar was hovering near 108 yen, not far off a 17-month low of 107.63 yen hit this week on bets that the U.S. Federal Reserve would go slow in future interest rate hikes.